Exam 13: Economymarket Analysis

Warren Buffett thinks long-term movements in stock prices are caused by which of the following two economic variables?

The stock market is a leading indicator of the economy because investors discount future cash flows.

In the U.S., the largest component of GDP is:

During periods of restrictive Federal Reserve monetary policy, the stock market usually performs poorly.

An analyst is considering the following forecasted economic data for France: risk-free rate = 2.5%; dividend yield = 1.5%; share repurchases = 1%; nominal earnings growth = 3%; inflation = 1.3%; and change in P/E = 1%. Based on Grinold Kroner model, what is the estimated stock market return for France?

Which of the following actions is the Federal Reserve most likely to take to stimulate the economy?

Explain the monetary policy the Fed is likely to implement if it believes that inflation has become a primary concern for the U.S. economy in the future. Indicate how the Fed is likely to implement this monetary policy.

When investors say that "the market" is up, they are usually referring to:

Traditionally, when have stock prices generally peaked?

Use the constant-growth dividend discount model to explain why stock prices have an inverse relationship to interest rates.

Which of the following groups is responsible for executing the Fed's directives to change the money supply?

Which of the following types of yield curves is typically considered to be associated with an economic expansion?

Most analysts agree that using the money supply as an indicator of future economic activity is accurate.

The Fed model, which uses the E/P ratio in its calculations:

Is it useful to do a trend analysis of P/E ratios of the S&P 500 Composite Index over time and extrapolate it to project future expected P/Es?

The financial news reports that the market is overvalued at a near record high based on the earnings multiplier. What does that mean to you?

The longest peacetime expansion began in 2009.

The institution most involved with the U.S. money supply and interest rates is:

Over the past 30 years, the average P/E ratio for the S&P 500 has been 20.

According to available evidence, investors lose more by missing a bull market than by staying in a bear market.